Helping People Play With Electricity, LittleBits Closes $3.65M Series A

Analog toy makers-like the Lego Group, which makes a huge array of building blocks, or Infinitoy, the makers of Zoob spherical, joint-connected building “blocks”-should be feeling their age right now. A New York City start-up, founded in September 2011, LittleBits Electronics, raised $3.65 million to make and sell its “open source hardware,” or electronic component kits for kids, artists and engineers world-wide.

Along with the series A funding, littleBits revealed a new partnership with PCH International-the venture-backed, supply chain management company headquartered in Cork, Ireland, with main operations in Shenzen, China. Starting in August this year, PCH will begin producing littleBits products.

Bdeir said the series A capital infusion, and the PCH partnership will enable littleBits to meet high demand for its snap-together, electronic modules, and release new littleBits kits and “bits” without raising prices.

“We don’t want this to be a luxury toy,” she said. “We want this to be accessible.”

From its first days in operation, littleBits created a buzz among “makers,” or hobbyist inventors and engineers, and educators. The company has already fulfilled orders from customers in Japan, Singapore, India, and all over Latin America. It is negotiating deals with retailers from museum stores to toy stores and schools, too. “Some consumers don’t even have Internet access but want to get their hands on these,” Ms. Bdeir added, a sign that the product resonates beyond the fiercely Internet-connected “maker” scene. Thirty percent of littleBits’ orders to-date came from outside of the U.S. she said.

The littleBits kits include modules that can be assembled easily by hand, unlike a pile of wires, circuitry, batteries, LED lights, sensors, noise makers, motors and fans. A ten-piece starter kit costs about $89. The modules help teach everything from engineering basics to visual art. Littlebits customers and the company share gadget designs and lesson plans openly online.

True Ventures’ portfolio includes a large number of “maker” businesses and hardware brands, such as MakerBot Industries and TinkerCAD, FitBit and Sifteo. A co-founder of True Ventures, Jon Callaghan, said of the many interesting businesses in the toy market, he had not seen any that were open-source and electronics-focused.

“This company makes something that captures the interest of three-year-olds and 85-year-olds equally. It is part of a huge creative movement that’s using the web to share innovation, and helping people learn from each other,” he added.

With its series A investment, Callaghan wants littleBits to focus on fundamentals, by “building a phenomenal team,” and “making sure [the company] gets product to all the customers who want it.” The world-wide market for toys is now approaching $90 billion, according to True Ventures estimates.

Research from the NPD Group, shared with Dow Jones by Bdeir, suggests that demand for electronic products and building sets is on the rise in the world-wide toy market. In 2011, NPD reported that sales of “building sets” increased 23%, the highest for any toy category they then measured.

About Venture Capital Dispatch

Produced by the editors of Dow Jones VentureWire, Venture Capital Dispatch tracks the fast-moving developments at the intersection of high-tech innovation and venture capital finance. Featuring the VentureWire reporting team in the Silicon Valley, New York, Boston and Shanghai tech centers, Venture Capital Dispatch provides insight into the newest start-ups and latest trends in venture capital investing. Write us at VCdispatch@dowjones.com. For more information on Dow Jones products covering venture capital and other financial markets, go to http://pevc.dowjones.com.